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Sars revises expected revenue loss due to illicit lockdown trade to R1.7bn

The government resolved over six weeks ago to enforce a national lockdown that banned the sale of cigarettes and alcohol, giving rise to chancers from the underground market who thrive on dodging tax laws.

 Picture: sars.gov.za

JOHANNESBURG - The South African Revenue Service (Sars) on Tuesday said it was concerned about the growth of underground and illicit markets during the lockdown period, adding that there was clear evidence that criminal activities were thriving.

The agency has revised its expected losses in revenue due to the illicit trade of products it derives its excise duties taxes from, to R1.7 billion.

The government resolved over six weeks ago to enforce a national lockdown that banned the sale of cigarettes and alcohol, giving rise to chancers from the underground market who thrive on dodging tax laws.

Sars commissioner Edward Kieswetter has explained that in the past month, the revenue service has collated data related to the illicit market showing that there was an increase in the illicit economy.

South Africans who cannot access alcohol and cigarettes through legal channels due to the lockdown have been resorting to the alternative economy, which drains the fiscus through tax revenue.

Kieswetter said that while Sars had calculated the year-on-year decline in excise duties to amount to 54.7%, which is R1.3 billion in tax value, the amount was increased after the inclusion of R400 million in levies.

He conceded that although it was early days, the trend was worrying.

Sars was presenting its strategy to Parliament’s joint committee on finance.

The commissioner further told the lawmakers that they were receiving tax payment deferral applications from the affected sectors.

Meanwhile, tobacco producers have launched a court application opposing the government’s decision to ban the sale of cigarettes.